Three-person benefits department is agency's fastest growth unit
Building a strong benefits program starts with an employee survey
By Len Strazewski
Big or small, employers all confront and manage risk, says Rich Hecker, CIC, vice president of EHL Insurance, Inc., in Poulsbo, Washington. And while property/casualty insurance issues, workers compensation loss control and business interruption are all traditional issues for risk management programs, many employers overlook risks inherent in their employee benefits programs.
Rising health care costs, evolving state and federal regulations and the complexities of employee benefits administration all pose challenges for employers, and the stakes are only getting higher as health reform reshapes health plans.
"It's all risk," explains Hecker, "and it all demands a high level of strategic planning and execution from our clients and our consultants. Many employers tend to overlook how their employee benefits relate to not only their overall costs, but also employee health, absenteeism, presenteeism and productivity."
As a result, some employers are missing opportunities to take control of their benefit plans, health care costs and human resources management issues, he says. Even small employers have employee benefits options that can reduce or stabilize their costs and improve their workplace environment—even if their group health plans are community rated.
Founded in the 1930s, EHL has been a commercial insurance leader in a small town of 9,000 and a total commercial market of about 400,000. Employee benefits has never been a huge component of total revenues, contributing only about 13% of the agency's $3.1 million in annual revenues. But it has recently become the firm's fastest growing business niche, up 45% from last year.
The agency has 26 employees, including three in employee benefits services and a human resource consultant. The agency also has strategic partnerships with local expertise in health and wellness management.
EHL is also a member of the Sitkins Group for independent agents and the Benefits Growth Network, Hecker says. Both organizations provide EHL with ongoing support and help in designing its business model, he says.
Commercial clients generally range in size from about 50 to 300 employees, Hecker says, with a minimum size of 25. He observes that he would like to see benefits revenues increase to about one-third of an agency total of more than $4 million next year as the agency continues to integrate employee benefits into its professional risk-advising practice.
"We have a defined process that we introduce with all of our clients," Hecker explains, "as we seek to understand our clients, their goals, concerns and issues. The process explores all levels of risk, but allows us to produce a unique value proposition for employee benefits as we design and market cost effective benefit plans that maximize human capital."
The four-step process includes:
—Discovery. The agency meets with its clients for a multi-level presentation of its capabilities in risk management and employee benefits and discusses the business goals and strategic positions of its clients.
—Design. The agency presents a risk reduction plan that includes traditional property/casualty risks and employees benefits. The plan is designed to lower clients' overall cost of risk.
—Implementation. The agency and its clients launch a comprehensive program with specific targets.
—Continuation. The agency analyzes the plan performance and evaluates its success, fine-tuning as needed to continue to meet client goals. The agency presents a stewardship report that describes how well the agency and its plan have met the client expectations.
"We are in the business of long-term relationships with our clients," Hecker says. "And we focus on accountability. We develop a calendar of services that coordinate with our plan and review it periodically. The process also allows us to move with our clients as their business changes and their goals evolve."
Health care costs are the dominant concerns among new clients, says Senior Employee Benefits Advisor Amy Simonis. Client premiums have increased 12% to 15% on average, but a few clients have reported increases as high as 40%.
Re-marketing health plans without a more comprehensive plan provides little value, she says, so the agency often starts from scratch in identifying not only client targets, but their employees' understanding of their benefit plans.
Simonis recommends a preliminary employee survey to assess employee needs and their understanding of their existing employee benefits package. "Education is an important factor in designing a benefits plan. If employees don't understand their benefits, they won't appreciate them."
The survey identifies the employees' risk tolerance and their propensity to accept account-based health plans, as well as their general behavior with their health plan. It may ask how often they see a primary care doctor or how often they exceed their medical deductible.
The agency incorporates survey results in plan designs and uses them to help guide the enrollment and benefits education process. The survey also provides a baseline for evaluation when the agency reports back later in its process about how well their plan has worked.
The results help the agency show, "We've heard you and we have designed the plan you wanted," Simonis says. And the risk management programs are working, she notes. In at least one case, a client has done what many employers consider impossible—hold the premium increase to zero.
Simonis and her colleague, Senior Employee Benefits Advisor Todd Allison, agree that willingness to adopt strategies has been increasing. High-deductible, consumer-directed health plans are becoming more acceptable.
Many clients have begun to provide two or more health plan options, including traditional preferred provider organization (PPO) major medical plans and health savings accounts (HSAs), Allison says.
HSAs encourage employees to make better economic choices and pay closer attention to health care costs, as well as provide platforms for wellness programs that may help reduce costs over time, he says. "Today, more than ever, we have to take more responsibility for our care and health care costs."
The plans also may include wellness features, such as health risk assessments and health education that can help employees reduce their personal risk. Local health plans have been increasing their own wellness and health education services, and the agency can coordinate client access to those services, Allison says.
Leading health plans in the region include the Group Health Cooperative in Seattle, Premera Blue Cross in Mountlake Terrace, Washington, and Regency Blue Shield in Seattle.
Employers also are making some general reductions in the other benefits they offer, agency executives say. As group medical costs increase, employers have become less likely to pay for ancillary benefits such as dental and vision insurance and high limits of group term life insurance. Most ancillary benefits are moving to the voluntary, employee-paid market, they say.
Account Manager Heather Torres manages the day-to-day contact with clients and their employees after the agency has implemented its employee benefits plan design. "I'm the promise keeper at EHL," she explains. "I function as the extension of the employer's human resources department for employee benefits and take responsibility for the administration process—from processing enrollment through the explanation of claims."
Most clients choose the personal touch in managing open enrollment, Torres says. As part of its benefits administration services, the agency provides small group benefits communication meetings and plan enrollment or, at the employer's request, one-to-one conferences with employees. Most employees make benefits decisions with partners or spouses, so Torres says she has to be available to consult with them personally to help them complete their enrollment choices.
Employees, she says, look to their human resources department as the front line of guidance of their benefits, but many employers have trimmed their staffs to the essentials, leaving behind few people with benefits expertise.
Most of the follow-up issues referred to the agency are minor to the benefits process, but important to individuals and have relatively easy solutions. "Employees may have problems understanding their Explanation of Benefits or filing a claim. They may need assistance locating a health care provider within the carrier's network," she says.
Employees are referred by the employer or may contact the agency directly by phone or, increasingly, by e-mail as they struggle with some of their plan details. Technology is becoming an important issue for both employers and employees, and Torres says the agency can assist employers in implementing Internet-based systems that can facilitate enrollment and allow employees to make life-based changes in their records—such as new dependents and beneficiaries— and file claims.
"The new Web-based systems help eliminate a lot of the human error inherent in benefits record-keeping and avoid such common errors as incorrect Social Security numbers or wrong addresses," Torres explains.
In addition to employee education and enrollment, EHL also provides a wide range of human resources consulting and employer education. EHL human resource consulting can help with compliance audits; best hiring practices; personnel forms and documentation; turnover, discipline and termination practices; employee lawsuit prevention and employee handbook development, among other services.
Employee litigation has become an increasing problem, EHL executives note, and the agency helps its clients be proactive with best practices training as part of its ongoing educational seminar series, EHL University.
Topics include exploration of sexual harassment prevention and investigation; discipline and termination, performance appraisals and personnel file documentation; ergonomics and federal compliance including FMLA, FLSA, ADA, COBRA and ERISA.
Len Strazewski is a Chicago-based writer, editor and educator specializing in marketing, management and technology topics. In addition to contributing to Rough Notes, he has written on insurance for Business Insurance, Risk & Insurance, the Chicago Tribune and Human Resource Executive, among other publications.